A huge solar power farm intended for the north-western Victorian town of Mildura is in doubt after the EnergyAustralia-backed project again missed out on federal government funding.

The Australian Renewable Energy Agency (ARENA) today unveiled its investment plan for 2012-15 and its general funding strategy aimed at promoting the development of renewable energy, particularly in regional Australia.

ARENA, which was launched in July, increased the funding available for investment, including for the Solar Flagships Program it inherited, from $1.7 billion to $2.2 billion. Even so, the agency had to make "tough decisions" on its allocation, Greg Bourne, chair of ARENA, said in a statement.

ARENA decided not to commit funds to EnergyAustralia's proposed Mallee Solar Park, costing as much as $700 million to develop, because of its "broad similarity" to a thin-film solar photovoltaic project being built by AGL Energy and First Solar.

“We are obviously disappointed with the decision," a spokeswoman for EnergyAustralia, formerly TRUenergy, said.

“We believe we submitted a strong and competitive proposal that would have provided economic and environmental benefits to the State, however we understand we were up against some other good projects," she said. “We will continue to assess what funding options are available.”

The federal government has already committed $129.7 million and the NSW government $64.9 million to the AGL- First Solar's sites in Nyngan, west of Dubbo, and Broken Hill.

"We are also continuing discussions with Moree Solar Farm and Infigen-Suntech on potential projects based on their short-listed Solar Flagships program applications," Mr Bourne said.

The Mallee Solar Park had missed out on a previous flagship grant. The Baillieu government had pledged funding for the project if it succeeded in securing federal funds after the Brumby government had promised to tip in as much as $100 million.

The 600-hectare solar park would reportedly have been 180 megawatts in size and created as many as 200 jobs. John Forrest, the Federal MP for Mallee, described the $700 million project as potentially "be one of the largest solar power stations globally" that would be "a project of both State and national significance," according to a report on his website.

Also ruled out for ARENA funding was the 250-megawatt Solar Dawn solar thermal project proposed to be built near Chinchilla in south-western Queensland. That venture aims to construct a solar field of mirrors, steam boiler tubes and a "power block" over 450 hectares.

ARENA plans

ARENA has $3.2 billion funding locked in until 2020 to help renewable energy technologies move from research, development and demonstration to commercialisation, although some of the funds are already earmarked for projects support by the Australian Solar Institute and other government bodies that will be rolled into the agency.

Among its list of priorities released today, ARENA said the majority of its funds over the next three years will be directed to energy generation projects "that are closest to commercial viability and where investment will accelerate this outcome."

"We have around about $2 billion yet to be allocated," Mr Bourne told Fairfax Media. Solar, which along with geothermal technologies, received much of the assigned funding, is likely to be remain a priority.

"On a world stage we do actually have pretty much world leadership still in the solar photovoltaic area," he said. "That's very, very hard to say about any other technology in the pie-charts that are around."

Beyond the identification of technologies where Australia has an edge or the prospect of grabbing one, the agency will also work on removing obstacles to their take-up.

"Is it possible to set up conditions (enabling) a cascade of change to occur?," Mr Bourne said."It may be that we can make a small in investment in the removal of some of those roadblocks."

Among the agency's activities will be efforts to explore the opportunities of off-grid and near-grid energy generation. The funding may also extend to identifying potential for renewable transport fuels.

The Energy White Paper released by the government last week, forecast the share of Australia's power generation will double to 20 per cent by 2020 and double again to 40 per cent by 2035 and reach a half share by 2050. The latter target may require as much as $200 billion in investment to achieve, the report said.